TIDMGRG
RNS Number : 8038H
Greggs PLC
01 August 2023
1 August 2023
GREGGS PLC
("Greggs" or the "Company")
INTERIM RESULTS FOR THE 26 WEEKSED 1 JULY 2023
Strategic growth plans delivering strong performance
First half financial highlights
H1 2023 H1 2022
Total sales GBP844.0m GBP694.5m
---------- ----------
Underlying pre-tax profit excluding exceptional GBP63.7m GBP55.8m
items *
---------- ----------
Pre-tax profit GBP80.0m GBP55.8m
---------- ----------
Underlying diluted earnings per share excluding
exceptional items* 46.8p 44.8p
---------- ----------
Diluted earnings per share 59.0p 44.8p
---------- ----------
Ordinary interim dividend per share 16.0p 15.0p
---------- ----------
* Excludes impact of GBP16.3 million exceptional net income
related to settlement of a Covid business interruption insurance
claim
-- Total first-half sales up 21.5%, with company-managed shop LFL** sales up 16.0%
-- Underlying profit before tax excluding exceptional items up 14.2% to GBP63.7 million.
-- Reported pre-tax profit includes an additional GBP16.3
million of exceptional net income recognised in respect of the
settlement of a Covid business interruption insurance claim
-- Strong cash position of GBP139 million supporting plans for future investment in growth
-- Underlying earnings growth of 4.5% reflects increase in Corporation Tax rate
-- Interim dividend of 16 pence per share declared, an increase of 6.7%
** Like-for-like (LFL) company-managed shop sales performance
against comparable period in 2022
Strategic progress
-- Growing and developing the Greggs estate : 94 new shops
opened in the first half, 44 closures; 2,378 shops trading as at 1
July 2023. Strong pipeline of good opportunities and continue to
anticipate circa 150 net new shop openings in 2023.
-- Expanding our evening trade : continued extension of early
evening trading progressing in line with plan. Evening remains the
fastest growing daypart and, in the first half, represented 8.3% of
company-managed shop sales (H1 2022: 6.5%).
-- Developing our digital channels : good progress in improving
operational service levels for delivery customers. Trial with
second delivery aggregator progressing well.
-- Broadening customer appeal and driving loyalty : continued
growth in brand health and market share. Further increase in Greggs
App participation: 10.6% of company-managed shop transactions
scanned in first half (H1 2022: 5.2%).
-- Supply chain investment : commenced redevelopment of
Birmingham distribution centre, extension of Amesbury distribution
centre due to start in the second half. Fourth savoury production
line at Balliol Park in Newcastle upon Tyne due to be commissioned
in the fourth quarter.
Outlook
The strong trading momentum of the first half has continued into
the second half of the year, with good sales reflecting the
exceptional value that Greggs offers to customers who need food and
drink on-the-go. The rate of cost inflation has started to ease and
we expect this trend to continue through the second half.
Whilst uncertainties in the economic outlook remain, we continue
to trade in line with our plan and are making good progress against
our strategic objective to grow the frequency of customer visits
through new channels. As such, the Board's expectations for the
full year outcome are unchanged .
" Greggs strong performance continued in the first half of 2023
as we deliver on our strategic growth plan. With consumers
remaining under pressure, we continue to offer exceptional value,
which is reflected in our performance and growing market share
.
"In the period we continued to open further new shops, extended
trading hours into the evening and saw increased participation in
the Greggs App.
"Our ambitious plans for growth are o n track and our amazing
teams are committed to realising the opportunity to become a
significantly larger, multi-channel business ."
- Roisin Currie, Chief Executive
ENQUIRIES:
Greggs plc Hudson Sandler
Roisin Currie, Chief Executive Wendy Baker / Nick Moore
Richard Hutton, Chief Financial /
Officer Sophie Miles / Emily Brooker
David Watson, Head of IR Email: greggs@hudsonsandler.com
Tel: 0191 281 7721 Tel: 020 7796 4133
An audio webcast of the analysts' presentation will be available
to download later today at http://corporate.greggs.co.uk/
CHIEF EXECUTIVE'S REPORT
Greggs has continued to trade well in 2023 with like-for-like
sales in company-managed shops growing by 16.0% when compared with
the equivalent period of 2022 . Total sales for the 26 weeks to 1
July 2023 were GBP844.0 million, an increase of 21.5% (H1 2022:
GBP694.5 million).
We continue to make good progress with our strategic growth
plan, which is centred around 1) growing and developing our estate;
2) expanding our evening trade; 3) developing our digital services;
4) broadening customer appeal and driving loyalty. These objectives
are underpinned by investment in our supply chain and systems which
will enable us to drive progress and growth across our business
.
Operational review
The first half of 2023 saw Greggs deliver a strong sales
performance. At a time when consumers are under pressure, our
long-standing focus on providing outstanding value on-the-go food
and drink is as relevant as ever. The LFL performance for the first
two months of the year was flattered by comparison with the
Omicron-affected period in 2022 and the actions we have taken to
make Greggs available in more channels and at more times of day
continue to result in additional customer visits.
Our new Flatbread Range, including Mexican Chicken and Vegan
Tandoori Chicken-Free has performed well and, alongside the new
Sweet Chilli Chicken Noodle Salad, extends our range of healthier
options for customers. Plant-based foods are contributing more
significantly to our range over time and the introduction of new
options such as the Vegan Mexican Chicken-Free Bake are testament
to this trend. Pizza continues to be in high demand, particularly
in the evening and our Late Trade Pizza Deal is proving to be very
popular.
In the first half of 2023 we opened 94 new shops (including 33
franchised units) and closed 44 shops, giving a total of 2,378
shops (of which 466 are franchised) trading as at 1 July 2023. We
have increased the pace of both openings and closures as we expand
the reach of our shops into new locations and relocate existing
shops to larger sites in better locations to facilitate further
growth. The phasing of shop closures was unusual in its weighting
towards the first half of the year. However, we have a strong new
shop pipeline and we remain confident that we will open around 150
net new shops in the year as a whole.
Greggs has a growing presence in travel hubs and in the first
half we opened shops at Glasgow and Cardiff Airports as well as
Shepherds Bush and Canary Wharf Underground stations. Last week we
opened our latest airport unit at London Gatwick Airport's South
Terminal.
In the first half of 2023 we refurbished 71 shops, modernising
them to our latest look and enhancing their capability for food
preparation and digital collection. We anticipate completing around
140 shop refurbishments, 125 company-managed and 15 franchised, in
2023 (2022: 86 refurbishments).
Strategic development
Growing and developing the Greggs estate
Our assessment of catchments across the UK continues to support
our ambition to have significantly more than 3,000 shops in the
Greggs estate. Our confidence in this opportunity is underpinned by
recent success in catchments where Greggs is underrepresented such
as retail parks, railway stations, airports, roadsides and
supermarkets. We now have shops trading in Tesco, Asda and
Sainsburys supermarkets, with plans for further development.
Greggs is a trusted brand offering a strong covenant to
landlords and franchise partners and this continues to support the
strength of our shop pipeline. We are on track to deliver 150 net
new shop openings in 2023 with around a third of these expected to
be with franchise partners, in line with the trend in recent years.
We now work with 16 franchise partners who recognise the value that
the Greggs brand brings to the catchments in which they
operate.
Evening trade
We have continued to grow sales in the evening daypart. This
remains a significant opportunity for Greggs as it is the largest
segment of the food-to-go market by value, yet the one where Greggs
currently has the lowest level of penetration. In the first half of
2023, post-4pm sales grew more strongly than any other daypart, and
represented 8.3% of company-managed shop sales, up from 6.5% in the
first half of 2022. The extension of trading hours supported
evening growth and we also saw increased levels of trade post-4pm
in existing opening hours as customers recognise the convenience
and value of our offer later in the day.
Analysis of customer missions in the evening food-to-go market
suggests that 'Grab & Go' and 'Delivery' occasions represented
more than three quarters of the market in 2022 ( source: Circana) .
Our shop estate and existing menu are well positioned to serve Grab
& Go customers with key locations being transport hubs, city
centres, shopping centres and retail parks. In addition, suburban
shops offer a significant opportunity to grow our share of the
evening delivery market. Over time our new shops, relocation and
refurbishment programmes are all adding further seating capacity
for customers who choose to dine in.
Digital channels
Our multi-channel development strategy has progressed well in
the period, with a new and improved Click + Collect website ready
to launch, improving the customer experience through the order
process. Improved operational service levels, combined with
adaptation of shop pick-up points, are making for a better
collection experience for our customers. With the expansion of
personalisation options and the convenience that this channel
offers we expect to continue to see growing participation from our
customers.
Delivery sales remain an important opportunity and we made good
progress in the first half improving operational service levels
through our existing partnership with Just Eat. Our 30-shop trial
with a second delivery aggregator is progressing well.
Broadening customer appeal and driving loyalty
Greggs brand health and market share metrics continue to improve
further from the record levels reported in 2022. In particular, our
reputation for value remains sector-leading, reflecting our focus
on delivering exceptional prices relative to the market. The
evolution of our range to include more plant-based and hot food and
drink options is important in broadening our appeal to more
consumers at more times of day.
We have continued to invest in enhancing our customer
relationship management capabilities in the first half of the year,
focusing on customer journeys such as onboarding, retention and
reactivation. Our growing digital data and analytics capability is
enabling us to understand better the needs of our customers and
provide them with more tailored, relevant communication. G rowth in
use of the Greggs App has continued, with 10.6% of company-managed
customer transactions scanned in the first half of 2023 (H1 2022:
5.2%). Analysis of customer behaviour continues to indicate that
the additional rewards offered to App users are more than
compensated by increased frequency of purchase.
Investing in our supply chain and technology for a bigger
business
To facilitate our strategic growth plan, we are investing in our
supply chain and in technology. We are on track to add a dditional
manufacturing capacity for our iconic savoury rolls and bakes at
Balliol Park in Newcastle upon Tyne, with a fourth production line
due to be commissioned in the fourth quarter.
We have commenced the redevelopment of our Birmingham
distribution centre, and work to extend our distribution centre in
Amesbury is due to start in the second half of 2023. This will add
additional logistics capacity to our network by the end of 2024.
Good progress is being made on the identification of sites for the
development of a national distribution centre and further
manufacturing and frozen storage facilities.
Our investment in technology continues to drive improved
processes and provide greater insight from our data. We have also
rolled out new EPOS tills across our shop estate, which will enable
improved management of pricing and promotions.
The Greggs Pledge
Our separate sustainability report details the progress made in
2022 on the objectives of the Greggs Pledge, our commitment to
continue to improve our ESG credentials in ten key areas by the end
of 2025. In the first half of 2023 we continued to make good
progress across the broad range of commitments, including opening a
further three "Outlet" shops to provide affordable food in areas of
social deprivation, with a share of profits also given to local
community organisations . As we continue to make good progress
against our Pledge objectives for 2025 we are also ensuring that we
have in place ambitious targets for the period beyond 2025. In
doing so we are assessing the next stage of our Pledge journey for
the period 2025 to 2030 and look forward to providing further
details on this in due course.
Financial performance
Total sales for the 26 weeks to 1 July 2023 were GBP844.0
million (H1 2022: GBP694.5 million). Like-for-like sales in
company-managed shops grew by 16.0%.
Underlying pre-tax profit (excluding a GBP16.3 million
exceptional gain, discussed below) was GBP63.7 million in the first
half of 2023 (H1 2022: GBP55.8 million). The year-on-year
progression was supported by a strong start to the year in January
and February where the sales comparatives in 2022 reflected the
impact of Omicron. Sales and profit progression normalised through
the remainder of the first half in line with our plan. The level of
interest income also grew by GBP2.5 million as a result of improved
deposit rates on the cash we have earmarked for our supply chain
capital investment.
Cost inflation, particularly in food and packaging commodities,
continued to be a feature of the first half of 2023 but is expected
to ease somewhat as we annualise on the significant mid-year
increases seen in 2022. Overall like-for-like cost inflation was
11% in the first half of 2023 and we expect this to reduce to
around 7% in the second half, averaging around 9% for the year as a
whole, in line with our previously communicated expectations.
Looking forward we have around four months' forward purchasing
cover on requirements for food, packaging and energy input costs.
The underlying net profit margin before taxation in the first half
of 2023 was 7.5% (H1 2022: 8.0%).
Our investments to grow the frequency of customer visits through
new channels and dayparts improve the leverage of our existing shop
base, delivering strong returns on capital. Delivering a healthy
return on capital employed (ROCE) is embedded as a key element of
our performance management and we aim to continue to deliver strong
overall returns as we grow the business further. Capacity
utilisation in our supply chain is currently at a historically high
level and this will normalise as we commission new facilities in
the coming years. Whilst this is likely to have a modest impact on
ROCE in the short term, this investment supports our long-term
growth ambitions, with our plans focused on a highly-efficient
supply chain model that supports the business's long-term record of
delivering strong returns on capital.
The net financing expense of GBP1.7 million in the period (H1
2022: GBP3.2 million) comprised GBP4.2 million in respect of the
IFRS 16 interest charge on lease liabilities, GBP0.4 million of
facility charges under the Company's (undrawn) financing facilities
offset by GBP2.9 million of interest received on bank deposits and
the Company's defined benefit pension scheme surplus.
Statutory pre-tax profit was GBP80.0 million (H1 2022: GBP55.8
million), reflecting an exceptional net gain of GBP16.3 million on
the settlement of our Covid business interruption insurance claim.
The net gain is recognised after deduction of fees payable to
advisers and the GBP2.5 million advance already recognised as
income in 2020.
The effective rate of Corporation Tax on underlying profits for
the period was 24.9% (H1 2022: 17.7%) with the year-on-year change
reflecting the increase in the headline rate of UK corporation tax
from 19% to 25% from 1 April of this year and the discontinuance of
'super-deduction' enhanced capital allowances from the same date.
The introduction of temporary 'full expensing' of capital
expenditure for the period from April 2023 to April 2026 will add
c1.0% to the previously-expected effective rate for this year only
as deferred tax is provided for at 25%. Including the exceptional
net gain the effective rate of Corporation Tax on profits for the
period was 24.6%.
Underlying d iluted earnings per share (excluding the
exceptional gain) for the period were 46.8 pence (H1 2022: 44.8
pence). Including the exceptional gain diluted earnings per share
for the period were 59.0 pence (H1 2022: 44.8 pence).
Capital expenditure and financial position
Capital expenditure during the first half was GBP85.6 million
(H1 2022: GBP41.9 million) as we increased investment in line with
our estate growth and development plans, added a dditional savoury
manufacturing capacity at our Balliol Park site and commenced the
redevelopment of our Birmingham distribution centre to increase
logistics capacity. In the balance of the year we will continue the
development of our retail estate and savoury manufacturing capacity
and commence work to extend the capacity of our Amesbury
distribution centre. Our full year guidance of circa GBP200 million
capital expenditure is unchanged.
We continue to carry a higher-than-normal cash position in order
to self-fund the multi-year investment in our significant growth
programme and ended the period with a cash balance of GBP138.6
million (2 July 2022: GBP145.7 million). In addition, the Company
has access to a revolving credit facility that allows it to draw up
to GBP100 million in committed funds, subject to it retaining a
minimum liquidity of GBP30 million (i.e. maximum net borrowings of
GBP70 million). The half year cash balance does not include the
exceptional insurance settlement, which was received after the
balance sheet date.
Dividend
The Board has declared an interim dividend of 16.0 pence per
share (2022: 15.0 pence), consistent with the first-half increase
in earnings per share. The overall ordinary dividend for the year
will be proposed in line with our progressive dividend policy,
which targets a full year ordinary dividend that is around two
times covered by underlying earnings.
The interim dividend will be paid on 6 October 2023 to those
shareholders on the register at the close of business on 8
September 2023.
Outlook
The strong trading momentum of the first half has continued into
the second half of the year, with good sales reflecting the
exceptional value that Greggs offers to customers who need food and
drink on-the-go. The rate of cost inflation has started to ease and
we expect this trend to continue through the second half.
Whilst uncertainties in the economic outlook remain, we continue
to trade in line with our plan and are making good progress against
our strategic objective to grow the frequency of customer visits
through new channels. As such, the Board's expectations for the
full year outcome are unchanged.
Roisin Currie
Chief Executive
1 August 2023
Greggs plc
Consolidated income statement
For the 26 weeks ended 1 July 2023
26 weeks ended 26 weeks ended 26 weeks ended 26 weeks ended 52 weeks ended
1 July 2023 1 July 2023 1 July 2023 2 July 2022 31 December 2022
--------------------- ------------------ --------------- --------------- ------------------
Excluding Exceptional items
exceptional items (see Note 4) Total Total Total
--------------------- ------------------ --------------- --------------- ------------------
GBPm GBPm GBPm GBPm GBPm
Revenue 844.0 - 844.0 694.5 1,512.8
Cost of sales (329.7) - (329.7) (260.7) (574.5)
--------------------- --------------------- ------------------ --------------- --------------- ------------------
Gross profit 514.3 - 514.3 433.8 938.3
Distribution and
selling costs (408.0) - (408.0) (339.3) (713.2)
Administrative
expenses (40.9) - (40.9) (35.5) (70.7)
Other income - 16.3 16.3 - -
Operating profit 65.4 16.3 81.7 59.0 154.4
Finance expense
(net) (1.7) - (1.7) (3.2) (6.1)
Profit before tax 63.7 16.3 80.0 55.8 148.3
Income tax (15.9) (3.8) (19.7) (9.9) (28.0)
Profit for the
period attributable
to equity holders
of the parent 47.8 12.5 60.3 45.9 120.3
===================== ================== =============== =============== ==================
Basic earnings per
share 47.2p 12.3p 59.5p 45.2p 118.5p
Diluted earnings per
share 46.8p 12.2p 59.0p 44.8p 117.5p
Greggs plc
Consolidated statement of comprehensive income
For the 26 weeks ended 1 July 2023
26 weeks ended 26 weeks ended 52 weeks ended
1 July 2023 2 July 2022 31 December 2022
GBPm GBPm GBPm
Profit for the period 60.3 45.9 120.3
Other comprehensive income
Items that will not be recycled to profit and loss:
Remeasurements on defined benefit pension plans 0.2 2.2 0.7
Tax on remeasurements on defined benefit pension plans 0.1 0.0 1.8
Other comprehensive income for the period, net of income tax 0.3 2.2 2.5
--------------- --------------- ------------------
Total comprehensive income for the period 60.6 48.1 122.8
=============== =============== ==================
Greggs plc
Consolidated balance sheet
as at 1 July 2023
1 July 2023 2 July 2022 31 December 2022
GBPm GBPm GBPm
ASSETS
Non-current assets
Intangible assets 13.6 14.0 13.5
Property, plant and equipment 439.4 355.4 390.0
Right-of-use assets 284.3 271.1 281.6
Defined benefit pension asset 6.7 2.3 6.3
744.0 642.8 691.4
Current assets
Inventories 44.6 33.1 40.6
Trade and other receivables 64.4 37.3 50.2
Current tax 8.1 - 0.6
Cash and cash equivalents 138.6 145.7 191.6
255.7 216.1 283.0
Total assets 999.7 858.9 974.4
------------ ------------ -----------------
LIABILITIES
Current liabilities
Trade and other payables (180.9) (149.1) (191.7)
Current tax liability - (5.8) -
Lease liabilities (51.9) (49.7) (48.8)
Provisions (3.0) (3.9) (3.6)
(235.8) (208.5) (244.1)
Non-current liabilities
Other payables (2.6) (3.0) (2.8)
Lease liabilities (252.5) (241.2) (252.5)
Deferred tax liability (44.4) (12.5) (26.3)
Long-term provisions (3.0) (2.1) (2.7)
(302.5) (258.8) (284.3)
Total liabilities (538.3) (467.3) (528.4)
------------ ------------ -----------------
Net assets 461.4 391.6 446.0
============ ============ =================
EQUITY
Capital and reserves
Issued capital 2.0 2.0 2.0
Share premium account 25.1 22.3 23.1
Capital redemption reserve 0.4 0.4 0.4
Retained earnings 433.9 366.9 420.5
Total equity attributable to equity holders of the Parent 461.4 391.6 446.0
============ ============ =================
Greggs plc
Consolidated statement of changes in equity
For the 26 weeks ended 1 July 2023
26 weeks ended 2 July 2022
Issued Share Capital Retained Total
capital premium redemption earnings
reserve
GBPm GBPm GBPm GBPm GBPm
Balance at 2 January 2022 2.0 20.0 0.4 406.8 429.2
Total comprehensive income for the period
Profit for the period - - - 45.9 45.9
Other comprehensive income - - - 2.2 2.2
Total comprehensive income for the period - - - 48.1 48.1
Transactions with owners, recorded directly in equity
Issue of ordinary shares - 2.3 - - 2.3
Purchase of own shares - - - (3.0) (3.0)
Share-based payment transactions - - - 2.1 2.1
Dividends to equity holders (83.3) (83.3)
Tax items taken directly to reserves - - - (3.8) (3.8)
--------- --------- ------------ ---------- -------
Total transactions with owners - 2.3 - (88.0) (85.7)
--------- --------- ------------ ---------- -------
Balance at 2 July 2022 2.0 22.3 0.4 366.9 391.6
--------- --------- ------------ ---------- -------
52 weeks ended 31 December 2022
Issued Share Capital Retained Total
capital premium redemption earnings
reserve
GBPm GBPm GBPm GBPm GBPm
Balance at 2 January 2022 2.0 20.0 0.4 406.8 429.2
Total comprehensive income
for the period
Profit for the financial year - - - 120.3 120.3
Other comprehensive income - - - 2.5 2.5
--------- --------- ------------ ---------- --------
Total comprehensive income
for the year - - - 122.8 122.8
Transactions with owners,
recorded directly in equity
Issue of ordinary shares - 3.1 - - 3.1
Purchase of own shares - - - (11.0) (11.0)
Share-based payment transactions - - - 3.6 3.6
Dividends to equity holders - - - (98.5) (98.5)
Tax items taken directly to
reserves - - - (3.2) (3.2)
--------- --------- ------------ ---------- --------
Total transactions with owners - 3.1 - (109.1) (106.0)
--------- --------- ------------ ---------- --------
Balance at 31 December 2022 2.0 23.1 0.4 420.5 446.0
========= ========= ============ ========== ========
26 weeks ended 1 July 2023
Issued Share Capital Retained Total
capital premium redemption earnings
reserve
GBPm GBPm GBPm GBPm GBPm
Balance at 1 January 2023 2.0 23.1 0.4 420.5 446.0
Total comprehensive income for the period
Profit for the period - - - 60.3 60.3
Other comprehensive income - - - 0.3 0.3
--------- --------- ------------ ---------- -------
Total comprehensive income for the period - - - 60.6 60.6
Transactions with owners, recorded directly in equity
Issue of ordinary shares - 2.0 - - 2.0
Sale of own shares - - - 0.8 0.8
Purchase of own shares - - - (5.0) (5.0)
Share-based payment transactions - - - 2.3 2.3
Dividends to equity holders (44.6) (44.6)
Tax items taken directly to reserves - - - (0.7) (0.7)
--------- --------- ------------ ---------- -------
Total transactions with owners - 2.0 - (47.2) (45.2)
--------- --------- ------------ ---------- -------
Balance at 1 July 2023 2.0 25.1 0.4 433.9 461.4
========= ========= ============ ========== =======
Greggs plc
Consolidated statement of cash flows
For the 26 weeks ended 1 July 2023
26 weeks ended 26 weeks ended 52 weeks ended
1 July 2023 2 July 2022 31 December 2022
GBPm GBPm GBPm
Cash flows from operating activities
Cash generated from operations (see page 13) 114.7 100.1 272.3
Income tax paid (9.8) (5.0) (13.3)
Interest paid on lease liabilities (4.2) (3.2) (6.8)
Interest paid on loans and borrowings (0.4) (0.4) (0.7)
Net cash inflow from operating activities 100.3 91.5 251.5
--------------- --------------- ------------------
Cash flows from investing activities
Acquisition of property, plant and equipment (81.0) (34.6) (100.0)
Acquisition of intangible assets (2.2) (1.5) (3.3)
Proceeds from sale of property, plant and equipment 0.5 1.9 0.9
Proceeds from sale of assets held for sale - - 1.6
Interest received 2.9 0.3 1.4
Net cash outflow from investing activities (79.8) (33.9) (99.4)
--------------- --------------- ------------------
Cash flows from financing activities
Proceeds from issue of share capital 2.0 2.2 3.1
Sale of own shares 0.8 - -
Purchase of own shares (5.0) (3.0) (11.0)
Dividends paid (44.6) (83.3) (98.5)
Repayment of principal of lease liabilities (26.7) (26.4) (52.7)
Net cash outflow from financing activities (73.5) (110.5) (159.1)
--------------- --------------- ------------------
Net decrease in cash and cash equivalents (53.0) (52.9) (7.0)
Cash and cash equivalents at the start of the period 191.6 198.6 198.6
Cash and cash equivalents at the end of the period 138.6 145.7 191.6
=============== =============== ==================
Greggs plc
Consolidated statement of cash flows (continued)
For the 26 weeks ended 1 July 2023
Cash flow statement - cash generated from operations
26 weeks ended 26 weeks ended 52 weeks ended
1 July 2023 2 July 2022 31 December 2022
GBPm GBPm GBPm
Profit for the period 60.3 45.9 120.3
Amortisation 2.1 2.4 4.7
Depreciation - property, plant and equipment 31.8 28.2 58.0
Depreciation - right-of-use assets 26.7 25.9 52.8
Impairment charge/(reversal) - property, plant and equipment 0.7 (0.2) 1.2
Impairment charge - right-of-use assets 0.3 0.6 0.0
Loss on sale of property, plant and equipment 1.0 0.5 1.0
Release of government grants (0.2) (0.2) (0.4)
Share-based payment expenses 2.3 2.1 3.6
Finance expense 1.7 3.2 6.1
Income tax expense 19.7 9.9 28.0
Increase in inventories (4.0) (5.3) (12.7)
(Increase)/decrease in receivables (14.2) 0.3 (12.4)
(Decrease)/increase in payables (13.2) (9.7) 30.8
Decrease in provisions (0.3) (1.0) (0.7)
Decrease in pension liability - (2.5) (8.0)
Cash from operating activities 114.7 100.1 272.3
=============== =============== ==================
Notes
1. Basis of preparation
The condensed accounts have been prepared for the 26 weeks ended
1 July 2023. Comparative figures are presented for the 26 weeks
ended 2 July 2022. These condensed accounts have been prepared in
accordance with IAS 34 Interim Financial Reporting as adopted by
the UK. They do not include all the information required for full
annual accounts, and should be read in conjunction with the Group
accounts for the 52 weeks ended 31 December 2022.
These condensed accounts are unaudited and were approved by the
Board of Directors on 1 August 2023.
The comparative figures for the 52 weeks ended 31 December 2022
are not the Company's statutory accounts for that financial year.
Those accounts were reported on by the Company's auditor and
delivered to the Registrar of Companies. The report of the auditors
was (i) unqualified, (ii) did not include a reference to any
matters to which the auditor drew attention by way of emphasis
without qualifying their report; and (iii) did not contain a
statement under section 498(2) or (3) of the Companies Act
2006.
Going concern
The Directors have considered the adoption of the going concern
basis of preparation for these condensed accounts. The Directors
have reviewed cash flow forecasts prepared for a period of 18
months from the date of approval of these condensed accounts.
At the end of the reporting period the Group had GBP208.6
million of available liquidity including GBP138.6 million cash and
cash equivalents and GBP70.0 million of the undrawn revolving
credit facility ('RCF').
In reviewing the cash flow forecasts the Directors considered
the current trading position of the Group and the likely capital
expenditure and working capital requirements of its growth plans.
The cashflow forecasts show that the Group expects to comply with
the covenants included within the RCF agreement throughout the
review period.
Taking into account the current cash level and the committed
facilities the Directors are confident that the Group will have
sufficient funds to allow it to continue to operate. After
reviewing the projections and sensitivity analysis the Directors
believe that it is appropriate to prepare the condensed accounts on
a going concern basis.
Judgements and estimates
In preparing these condensed accounts, management have made
judgements and estimates that affect the application of accounting
policies and the reported amounts of assets and liabilities, income
and expense. Actual results may differ from these estimates. In
addition to the key estimates and judgements disclosed in the
consolidated accounts for the 52 weeks ended 31 December 2022 the
following additional areas have been identified or updated for the
26 weeks ended 1 July 2023.
Impairment
Property, plant and equipment and right-of-use assets are
reviewed for impairment if events or changes in circumstances
indicate that the carrying value may not be recoverable. For
example, shop fittings and right-of-use assets may be impaired if
sales in that shop fall. When a review for impairment is conducted,
the recoverable amount is estimated based on either value- in-use
calculations or fair value less costs of disposal. Value-in-use
calculations are based on management's estimates of future cash
flows generated by the assets and an appropriate discount rate.
Consideration is also given to whether the impairment assessments
made in prior years remain appropriate based on the latest
expectations in respect of recoverable amount. Where it is
concluded that the impairment has reduced, a reversal of the
impairment is recorded.
The Group has traded profitably throughout 2022 and 2023 to
date. As such there is not considered to be a global indicator of
impairment across the Group's asset base. Where indicators of
impairment exist for specific cash generating units (CGUs), with
each individual shop considered its own CGU, then an impairment
review has been performed to calculate the recoverable value.
For those shops with indications of impairment (identified as
mature shops with low cash generation relative to the carrying
value of the associated assets), the value-in-use has been
calculated using the following assumptions:
-- Like-for-like transaction volumes for those shops have been
assumed to grow at a rate of 2.0% for the period of the impairment
review;
-- Where shops are currently used to fulfil orders for delivery,
the net cash flows for fulfilling these orders are included within
the estimated cash flows for the shop;
-- Earnings before interest, tax, depreciation, amortisation and
rent (EBITDAR) is used as a proxy for net cash flow excluding
rental payments;
-- Cash flows have been discounted at a pre-tax discount rate
that reflects the current market assessment of the time value of
money, including a risk uplift for uncertainty of future cash
flows. The discount rate as at 1 July 2023 was 10.4% (31 December
2022: 9.6%); and
-- Consideration of the appropriate period over which to
forecast cash flows, including reference to the lease term. Where
considered appropriate cash flows have been included for periods
beyond the lease probable end date (to a maximum of five years in
accordance with IAS 36).
On the basis of these calculations a net impairment charge of
GBP1.0m has been made in respect of 84 shops reflecting the higher
discount rate used in the calculation.
2. Accounting policies
The accounting policies applied by the Group in these condensed
accounts are the same as those applied by the Group in its
consolidated accounts for the 52 weeks ended 31 December 2022 other
than as disclosed below:
-- Amendments to IFRS 1 and IAS 12: Deferred Tax related to
Assets and Liabilities arising from a Single Transaction.
Its adoption did not have a material effect on the accounts.
Principal risks and uncertainties
The Directors have considered the principal risks and
uncertainties which could have a material impact on performance for
the remainder of the financial year.
The assessment of principal risks and uncertainties made in the
2022 Annual Report and Accounts remains valid and we do not believe
there to have been any material changes in the profile of those
risks since then.
We have considered whether the Company is facing any new
principal risks at each of our Risk Committee meetings so far
during 2023. All new and emerging areas of risk which have been
identified fall within the scope of our existing principal risks
and uncertainties.
We continue to consider climate risk as part of our overarching
risk discussions, and factor climate into existing risks rather
than describing it as a separate principal risk in its own right.
This ensures that climate risk is embedded within our core risk
activity, and is considered as an inherent part of our processes,
rather than as a standalone issue.
The assessment above should be read in conjunction with the
statement of principal risks described on pages 49-52 in the 2022
Annual Report and Accounts. Other than the matters described above
we believe our exposure to other principal risks faced by the
business is not significantly different to that described in that
statement.
3. Operating segments
The Board is considered to be the 'chief operating decision
maker' of the Group in the context of the IFRS 8 definition. In
addition to its company-managed retail activities, the Group
generates revenues from its business to business channel which
includes franchise and wholesale activities. Both channels were
categorised as reportable segments for the purposes of IFRS 8.
Company-managed retail activities - the Group sells a consistent
range of fresh bakery goods, sandwiches and drinks in its own shops
or via delivery. Sales are made to the general public on a cash
basis. All results arise in the UK.
Business to business channel - the Group sells products to
franchise and wholesale partners for sale in their own outlets as
well as charging a licence fee to franchise partners. These sales
and fees are invoiced to the partners on a credit basis. All
results arise in the UK.
All revenue in 2023 and 2022 was recognised at a point in
time.
The Board regularly reviews the revenues and trading profit of
each segment. The Board receives information on overheads, assets
and liabilities on an aggregated basis consistent with the Group
accounts.
26 weeks 26 weeks 26 weeks 26 weeks 26 weeks 26 weeks 52 weeks 52 weeks 52 weeks
ended ended ended ended ended ended ended ended ended
1 July 1 July 1 July 2 July 2 July 2 July 31 December 31 31
2023 2023 2023 2022 2022 2022 2022 December December
2022 2022
Retail Business Retail Business Retail Business
company-managed to company-managed to company-managed to
shops business Total shops business Total shops business Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Revenue 755.8 88.2 844.0 622.6 71.9 694.5 1,352.3 160.5 1,512.8
================ ========= ========= ================ ========= ========= ================ ========= =========
Trading
profit* 103.0 16.7 119.7 92.2 12.6 104.8 224.6 31.3 255.9
Overheads
including
profit
share (54.3) (45.8) (101.5)
--------- --------- ---------
Operating
profit 65.4 59.0 154.4
Finance
expense (1.7) (3.2) (6.1)
--------- --------- ---------
Profit
before
tax
(excluding
exceptional
items) 63.7 55.8 148.3
Exceptional 16.3 - -
items (see
Note 4)
--------- --------- ---------
Profit
before
tax 80.0 55.8 148.3
========= ========= =========
* Trading profit is defined as gross profit less supply chain
costs and retail costs (including property and direct management
costs) and before central overheads.
4. Exceptional items
The exceptional item relates to a net gain of GBP16.3 million on
the settlement of our Covid business interruption insurance claim.
The net gain is recognised after deduction of fees payable to
advisers and the GBP2.5 million advance already recognised as
income in 2020.
5. Defined benefit pension scheme
The valuation of the defined benefit pension scheme for the
purposes of IAS 19 (Revised) as at 31 December 2022 has been
updated as at 1 July 2023 and the movements have been reflected in
these condensed accounts.
6. Taxation
The taxation charge for the 26 weeks ended 1 July 2023 and 2
July 2022 is calculated by applying the Directors' best estimate of
the annual effective tax rate to the profit or loss for the period
using rates substantively enacted by the half year date as required
by IAS34 'Interim Financial Reporting'.
7. Earnings per share
26 weeks ended 1 26 weeks ended 1 26 weeks ended 1 26 weeks ended 2 52 weeks ended 31
July 2023 July 2023 July 2023 July 2022 December 2022
------------------ ------------------ ------------------ ------------------ ------------------
Excluding
exceptional items Exceptional
items Total Total Total
(see Note 4)
------------------ ------------------ ------------------ ------------------ ------------------
GBPm GBPm GBPm GBPm GBPm
Profit for the
period
attributable to
equity holders
of the parent 47.8 12.5 60.3 45.9 120.3
================== ================== ================== ================== ==================
Basic earnings
per share 47.2p 12.3p 59.5p 45.2p 118.5p
Diluted earnings
per share 46.8p 12.2p 59.0p 44.8p 117.5p
Weighted average number of ordinary shares
26 weeks 26 weeks ended 52 weeks ended
ended 1 July 2 July 2022 31 December
2023 2022
Number Number Number
Issued ordinary shares at start
of period 102,112,581 101,897,021 101,897,021
Effect of shares issued 29,793 28,515 100,009
Effect of own shares held (849,669) (369,828) (511,370)
Weighted average number of ordinary
shares during the period 101,292,705 101,555,708 101,485,660
Effect of share options in issue 1,014,417 902,676 849,222
Weighted average number of ordinary
shares (diluted) during the period 102,307,122 102,458,384 102,334,882
============== =============== ===============
Issued ordinary shares at end
of period 102,254,826 102,046,258 102,112,581
============== =============== ===============
8. Dividends
The following tables analyse dividends when paid and the year to
which they relate:
Dividend declared 26 weeks ended 26 weeks ended 52 weeks ended
1 July 2023 2 July 2022 31 December 2022
Pence per share Pence per share Pence per share
2021 special dividend - 40.0p 40.0p
2021 final dividend - 42.0p 42.0p
2022 interim dividend - - 15.0p
2022 final dividend 44.0p - -
44.0p 82.0p 97.0p
================ ================ ==================
26 weeks ended 26 weeks ended 52 weeks ended
1 July 2023 2 July 2022 31 December 2022
GBPm GBPm GBPm
Total dividend payable
2021 special dividend - 40.6 40.6
2021 final dividend - 42.7 42.7
2022 interim dividend - - 15.2
2022 final dividend 44.6 - -
--------------- --------------- ------------------
Total dividend paid in period 44.6 83.3 98.5
=============== =============== ==================
26 weeks ended 26 weeks ended 52 weeks ended
1 July 2023 2 July 2022 31 December 2022
GBPm GBPm GBPm
Dividend proposed at period end and not included as a liability
in the accounts
2022 interim dividend (15.0p per share) - 15.3 -
2022 final dividend (44.0p per share) - - 44.9
2023 interim dividend (16.0p per share) 16.1 - -
16.1 15.3 44.9
=============== =============== ==================
9. Related party transactions
There have been no related party transactions in the first 26
weeks of the current financial year which have materially affected
the financial position or performance of the Group.
Related parties are consistent with those disclosed in the
Group's Annual Report and Accounts for the 52 weeks ended 31
December 2022.
10. Half year report
The condensed accounts were approved by the Board of Directors
on 1 August 2023. They will be available on the Company's website,
corporate.greggs.co.uk
11. Calculation of Alternative Performance Measures
One-year like-for-like (LFL) sales increase - Like-for-like
(LFL) company-managed shop sales performance against comparable
period in 2022
26 weeks ended
1 July 2023
GBPm
Current year LFL sales 692.4
2022 LFL sales 596.7
Increase 95.7
==============
LFL sales increase percentage 16.0%
12. Statement of Directors' responsibilities
The Directors named below confirm on behalf of the Board of
Directors that to the best of their knowledge:
-- the condensed set of accounts has been prepared in accordance
with IAS 34 Interim Financial Reporting as adopted by the UK;
-- the interim management report includes a fair review of the information required by:
(a) DTR4.2.7R of the Disclosure and Transparency Rules, being an
indication of important events that have occurred during the first
26 weeks of the financial year and their impact on the condensed
set of accounts; and a description of the principal risks and
uncertainties for the remaining 26 weeks of the year; and
(b) DTR4.2.8R of the Disclosure and Transparency Rules, being
related party transactions that have taken place in the first 26
weeks of the financial year and that have materially affected the
financial position or performance of the Group during the period;
and any changes in the related party transactions described in the
last annual report that could do so.
The Directors of Greggs plc are listed in the Annual Report and
Accounts for the 52 weeks ended 31 December 2022. On 7 March 2023
Nigel Mills was appointed as a Non-Executive Director. On 17 May
2023 Sandra Turner and Helena Ganczakowski retired from the
Board.
For and on behalf of the Board of Directors
Roisin Currie Richard Hutton
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END
IR QFLFXXDLZBBF
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